Dry Weather Sees Mighty River Power's Earnings Under Pressure, Fair Value Unchanged (Corrected)

Mighty River Power's fiscal 2015 underlying net profit declined 22% to NZD 145 million, slightly below our NZD 153 million estimate. The primary driver was record-low hydro generation as a result of dry weather and reduced catchment inflow. Statutory net profit fell 78% to NZD 47 million with NZD 127 million in non-cash impairments and write-downs. We view the decision to exit international geothermal and closure of the Southdown thermal plant as long-term positives, as generation shifts to 100% renewable resources, the majority of which is hydro generation. Mighty River's renewable capacity is low-cost and future maintenance capital expenditure is reduced by the exit.